The Median Level of CEO Salaries at Exit

11/22/2016By Sammy Abdullah, CFA

Recently we wrote a blog looking at the median level of founder ownership at 79 companies upon their exit/IPO (median is 11%, average is 17%). We decided to dig deeper and look at the median level of CEO salaries. Below we present the data for 73 publicly traded tech companies upon their exit/IPO. A few observations really stand out to us:

Year of

Salary

Bonus

Options

Total

Company

CEO

Filing

Comp

Comp

Comp

Comp

Software

2U

Christopher Paucek

2013

$300,000

$450,000

$4,086,606

$4,836,606

Acacia

Murugesan Shanmugaraj

2016

$246,750

$122,045

$13,363

$382,158

Appfolio

Brian Donahoo

2014

$250,000

$1,763,000

$369,000

$2,382,000

Athenahealth, Inc.

Jonathan Bush

2007

$298,077

$0

$81,921

$379,998

Atlassian

Scott Farquhar

2015

$264,862

$23,041

$0

$287,903

BazaarVoice

Brett Hurt

2011

$250,000

$141,092

$0

$391,092

Benefitfocus, Inc.

Shawn Jenkins

2013

$510,513

$0

$370,420

$880,933

Box Inc

Aaron Levie

2014

$150,833

$38,750

$87

$189,670

BroadSoft, Inc.

Michael Tessler

2010

$276,058

$191,120

$493,176

$960,354

Castlight Health

Giovanni Colella

2014

$200,000

$0

$41,661

$241,662

Cornerstone

Adam Miller

2011

$310,000

$0

$3,664,591

$3,974,591

Cvent, Inc.

Rajeev Aggarwal

2013

$365,796

$97,020

$803

$463,619

Demandware

Thomas Ebling

2012

$275,000

$0

$211,680

$486,680

Five9, Inc.

Michael Burkland

2014

$366,212

$49,462

$1,932,377

$2,348,051

HortonWorks

Robert Bearden

2013

$166,667

$166,667

$727,292

$1,060,626

Hubspot

Brian Halligan

2013

$238,183

$1,212

$132,376

$371,771

Instructure

Joshua Coates

2015

$1

$0

$0

$1

Intralinks

J. Andrew Damico

2010

$325,000

$227,000

$11,921

$563,921

Jive Software, Inc.

Anthony Zingale

2011

$255,769

$0

$2,761,632

$3,017,401

Lifelock

Todd Davis

2012

$408,462

$0

$239,277

$647,739

LinkedIn

Jeffrey Weiner

2010

$250,000

$1,242

$211,055

$462,297

LivePerson Inc.

Robert Loscascio

2000

$108,000

$50,000

$0

$158,000

LogMeIN, Inc.

Michael Simon

2009

$265,000

$299,118

$72,686

$636,804

Marin Software

Christopher Lien

2013

$275,000

$0

$2,735,708

$3,010,708

Marketo

Phillip Fernandez

2012

$325,000

$308,750

$1,852,900

$2,486,650

Match Group

Sam Yagan

2016

$500,000

$600,000

$3,719,992

$4,819,992

Medidata Solutions

Tarek Sherif

2009

$360,000

$448,000

$58,136

$866,136

MindBody

Richard Stollmeyer

2014

$360,000

$106,484

$699,668

$1,166,152

MobileIron, Inc.

Robert Tinker

2014

$270,000

$0

$13,500

$283,500

Nant Health

Patrick Soon Shiong

2016

$0

$0

$0

$0

Netsuite

Zachary Nelson

2006

$300,000

$12,591

$143,000

$455,591

New Relic, Inc.

Lewis Cirne

2014

$240,000

$127,435

$0

$367,435

Proofpoint, Inc.

Gary Steele

2011

$300,000

$127,500

$816,884

$1,244,384

Qualys, Inc.

Philippe Courtot

2012

$300,000

$103,500

$0

$403,500

RealPage, Inc.

Stephen Winn

2010

$400,000

$250,440

$0

$650,440

RingCentral, Inc.

Vladimir Schmunis

2013

$325,000

$146,453

$3,166,531

$3,637,984

SalesForce

Marc Benioff

2003

$1

$0

$0

$1

Secureworks

Michael Cote

2015

$456,924

$3,328,038

$0

$3,784,962

ServiceNow

Frank Slootman

2011

$150,000

$116,218

$0

$266,218

Shopify

Tobias Lutke

2015

$339,055

$0

$0

$339,055

Splunk

Godfrey Sullivan

2011

$250,000

$500,000

$0

$750,000

SPS Commerce, Inc.

Archie Black

2009

$276,000

$29,728

$103,406

$409,134

Textura

Patrick Allin

2013

$455,000

$698,926

$677,899

$1,831,825

Twilio

Jeff Lawson

2016

$299,783

$15,000

$1,938,769

$2,253,552

Ultimate Softare

Scott Scherr

1998

$200,000

$0

$318,809

$518,809

Veeva Systems Inc.

Peter Gassner

2013

$225,000

$0

$0

$225,000

WorkDay

David Duffield

2012

$33,280

$1,500

$0

$34,780

Xactly

Chris Cabrera

2015

$342,000

$124,231

$0

$466,231

Zendesk

Mikkel Svane

2013

$200,000

$74,906

$0

$274,906

Payments

Square

Jack Dorsey

2016

$3,750

$0

$0

$3,750

Social

Facebook

Mark Zuckerburg

2012

$483,333

$220,500

$783,529

$1,487,362

Linkedin

Jeffrey Weiner

2011

$250,000

$211,055

$1,242

$462,297

Twitter

Dick Costolo

2013

$200,000

$0

$11,305,740

$11,505,740

Marketplaces

Priceline

Richard S. Braddock

1998

$112,500

$0

$5,000,000

$5,112,500

Sabre

Tom Klein

2014

$711,923

$0

$3,724,632

$4,436,555

Shutterstock

Jonathan Oringer

2012

$250,000

$0

$0

$250,000

Etsy

Chad Dickerson

2015

$300,000

$247,500

$0

$547,500

Lending Club

Renaud laplanche

2014

$314,583

$203,625

$0

$518,208

Angie's List

William Oesterle

2011

$254,995

$1,440,847

$141,586

$1,837,428

Zillow

Spencer M. Rascoff

2011

$215,780

$0

$351,200

$566,980

Groupon

Andrew Mason

2011

$180,000

$0

$4,599

$184,599

GrubHub

Matthew Maloney

2014

$265,000

$0

$417,827

$682,827

Care.com

Sheila Marcelo

2013

$259,167

$125,000

$78,750

$462,917

Content Distributors

Google

Eric Schmidt

2004

$250,000

$301,556

$2,894

$554,450

Yelp

Jeremy Stoppelman

2011

$220,000

$0

$0

$220,000

TrueCar

Scott Painter

2014

$313,186

$231,918

$5,201,179

$5,746,283

Netflix

Reed Hastings

2000

$12,698

$0

$1,550,000

$1,562,698

Pandora

Joseph Kennedy

2011

$325,000

$175,000

$0

$500,000

Gaming

Zynga

Mark Pincus

2011

$301,154

$135,000

$0

$436,154

Hardware

Fitbit

James Park

2015

$222,179

$80,000

$7,542,446

$7,844,625

GoPro

Nicholas Woodman

2014

$800,000

$1,003,200

$49,591

$1,852,791

TiVo Corporation

Michael Ramsay

1999

$150,000

$0

$0

$150,000

Garmin Ltd

Min Kao, Gary Burrell

2000

$166,270

$14,330

$51,879

$232,479

Median

$265,000

$50,000

$58,136

$518,809

Average

$271,572

$207,260

$929,784

$1,408,616

-Of the 73 companies, the median salary is $265,000 and the average is $271,572. Indeed, in our own portfolio of 10 companies, we’ve seen salaries including bonus as low as $35,000 and as high as $350,000. Have we seen a correlation between salary and performance in our portfolio? Actually no. However, as investors do we scrutinize those CEO’s that take higher salaries and are we more critical of their mistakes? Absolutely, because the median of $265,000 is for tech startups who were very successful (they IPO’d), so if you’re anywhere near a salary of that level as a startup CEO, you have to be driving exciting growth while headed towards a fantastic exit. If you’re getting paid a wonderful salary but the business is doing just OK or poorly, then you’re overpaid which is something your board won’t have much patience for.

-Some of these CEOs take minimal salaries, sometimes as low as $1. Joshua Coates of Instructure ($1) , Patrick Shiong of Nant Health ($0) , Marc Benioff of Salesforce ($1), Jack Dorsey of Square ($3,750), David Duffield of Workday ($33,280), and Reed Hastings of Netflix ($12,698) are all part of the club of CEOs that took very low salaries heading to their IPO. Why did they do it? Well, aside from the fact that they could afford it, they did it because they wanted to set an example for the rest of the company. By taking a low salary, the messages they’re conveying to employees and investors are: i) they believe in the value of their equity so cash means nothing to them; ii) and they’re frugal and treat the Company’s cash with respect, so employees should too. Few qualitative factors are as attractive to investors as a CEO that takes a low salary to make a point, so if you can afford it and you believe in the company, we recommend it.

-Before the IPO, some of the founders took options worth fantastic sums. For instance, James Park of Fitbit ($7.5mm), Dick Costolo of Twitter ($11.3mm), and Scott Painter at True Car ($5.2mm), among others all took home nice option packages the year before IPO. As a CEO, so long as you’re driving fantastic growth and value (which all 73 CEO’s were), it’s not out of line to expect additional option grants as a CEO. It’s actually market, and good investors have no problem rewarding CEOs that are performing.

-Salaries have gone up over time. As the table below shows, the median level of CEO ownership has risen since 1998. From 1998 to 2007, the median for each year averaged $156k. From 2008 to 2016, the median averaged $283k. It’s a good time to be the boss.

Year of

Salary

Bonus

Options

Total

MEDIANS BY YEAR

Filing

Comp

Comp

Comp

Comp

1998

$156,250

$0

$2,659,405

$2,815,655

1999

$150,000

$0

$0

$150,000

2000

$108,000

$14,330

$51,879

$232,479

2001

---

---

---

---

2002

---

---

---

---

2003

$1

$0

$0

$1

2004

$250,000

$301,556

$2,894

$554,450

2005

---

---

---

---

2006

$300,000

$12,591

$143,000

$455,591

2007

$298,077

$0

$81,921

$379,998

2008

---

---

---

---

2009

$276,000

$299,118

$72,686

$636,804

2010

$300,529

$209,060

$111,488

$607,181

2011

$250,000

$127,500

$1,242

$500,000

2012

$300,000

$1,500

$211,680

$486,680

2013

$267,084

$85,963

$524,160

$970,780

2014

$291,593

$77,973

$209,296

$924,490

2015

$300,000

$80,000

$0

$466,231

2016

$246,750

$15,000

$13,363

$382,158

Median after 2007

$283,797

$82,982

$92,087

$553,590

Median before 2007

$156,250

$0

$51,879

$379,998

Hopefully this article is helpful to you in thinking about where your salary is now and where it’s headed, and the message a high or low salary sends to investors and employees.